The creation of a new alliance board led by Renault chairman Jean-Dominique Senard has improved confidence that the two sides can push ahead with merger plans, the newspaper reported Wednesday, citing unidentified people familiar with both sides’ thinking.

A combination of Renault, Nissan, Fiat and Chrysler would create an automaker that could better compete against global competitors such as Volkswagen AG and Toyota Motor Corp. Carlos Ghosn, the former chairman of Renault and Nissan who was arrested in Tokyo in November on charges of financial wrongdoing, had held talks about merging Renault with Fiat Chrysler two to three years ago, the Financial Times reported, citing two unidentified sources. Ghosn’s proposal was stopped by the French government, the newspaper said.

Ghosn, who is free on bail pending his trial, has denied the charges against him.

Fiat Chrysler itself is seeking a partnership or merger, and Chairman John Elkann has met with other rivals including Peugeot-maker PSA Group of France to gauge the possibility of a deal, the newspaper reported.

Spokesmen for Renault, Nissan and Fiat Chrysler declined to comment on the report. Shares in Renault rose as much as 3.3 percent in Paris, while Fiat jumped as much as 3.8 percent in Milan.

The French carmaker, which owns 43 percent of Nissan, has a market capitalization of 17.3 billion euros ($19.5 billion). Nissan, which in turn owns 15 percent of Renault, has a market value of about $35 billion, while Fiat Chrysler’s is 20.4 billion euros.

The imbalance of power between Renault and Nissan has made an all-out merger between the two controversial. Before his arrest, Ghosn had planned to cement their alliance. Such a move faced resistance from within Nissan, including from Chief Executive Officer Hiroto Saikawa. Instead of a deeper capital tie-up, Nissan has sought to improve the Japanese bargaining position in a partnership it has said has for too long favored the French side.

In the face of strains, the idea of adding Fiat Chrysler to the mix with its management and production cultures from Italy and the U.S. would be a tall order. Further complicating any talks is the fact that Renault’s most powerful shareholder is the French government, whose stake would potentially be diluted.

Still, the Renault-Nissan alliance has often been cited as an example of a successful combination that didn’t go as far as a merger, underpinned by cross-shareholdings and cost-cutting. Yet the partnership has been challenged by the scandal surrounding Ghosn, with insiders from both sides saying trust between the two teams has degraded since the executive was jailed and ousted as chairman of both Nissan and Renault.

The partnership this month agreed to a new governance structure designed to streamline operational decisions, with Senard placed as the chairman of the alliance.